Can Cameron’s council estate plan work?

Published: by Pete Jefferys

David Cameron is on a blitz of housing policy announcements at the moment. Last week we had an idea for the direct commissioning of new homes, this week we have plans for regenerating 100 council estates. What should we make of it?

Knocking down and rebuilding peoples’ homes is obviously always going to be controversial. But that doesn’t mean it is always wrong. If the hard work is done to win the support of estate residents, and more affordable homes get built as a result, it can be really positive. And where estates are old and run down it can be positively essential to invest in renewal or replacement.

As we see it, David Cameron’s regeneration proposals have two clear advantages:

  • You could get a lot more homes into London through council estate regeneration. Savills estimate between 50,000 to 360,000 extra homes over several decades. This is by ‘filling in the gaps’ on existing estates. While it will never be enough to meet London’s need on its own, it could help supplement supply from other options such as reviewing green belt boundaries or building new towns.

  • Second, the ‘Complete Streets’ [PDF] approach the government is backing has real merits. The general idea that tower blocks with lots of empty space around them could be replaced by terraced streets, within mixed communities, is consistently popular with the public as a form of urban development. Research by the Fabians suggests that the public think the poor quality of some social housing stigmatises the tenants. New social housing should be attractive and desirable, as well as genuinely affordable.

Those are the good things. But there are also some major concerns that need to be addressed if this approach is going to work. We want to work with the government to make any programme that happens as good as it can be.

First, there must be guaranteed like for like replacement for residents on the estate. The same size home, the same level of rent, the same (or better) security. This is simply because homes to buy are very unlikely to be affordable to existing residents. Even averaged priced ‘Starter Homes’ will be unaffordable to low and middle earning families across all of London by 2020.

The bare minimum is that all social homes must be replaced with new social homes. Leaseholders and private renters are trickier:  I would argue that new private rented homes built should be offered on a better deal (longer contracts, predictable rents). First dibs on these homes could be given to displaced private renters on the estate, if they want and can afford them. Leaseholders could be offered shared equity or shared ownership deals if they can’t afford to buy a replacement, so long as the pricing is fair.

Second, if this is to work will need to be some major exemptions from some of the provisions in the Housing Bill currently going through Parliament. In particular, three things will need amending:

  • The forced sale of high value council homes. This policy is to force councils to sell vacant properties on the open market if they are above local price thresholds. On some estates in London, all the properties will be deemed ‘high value’- simply because of the location. If a large number of homes on these estates are force sold then it will make it much harder to finance a regeneration scheme. There will be more leaseholders who need to be bought out before a scheme can go ahead.
  • Starter Homes. The Bill creates a new requirement for Starter Homes to be built on all developments, ahead of other forms of affordable housing. If this applies to council estate regeneration schemes then the starter homes will suck up the subsidy that’s needed to replace the council homes.
  • 2-5 year social tenancies. The Bill will force councils to only off 2-5 year tenancies for newly let social housing. If these much less secure contracts are applied to the replacement council homes, then tenants will lose the security they had before. Few will be willing to support estate regeneration if that’s the price. Moreover, once the 2-5 year period has elapsed, the home could be counted as vacant and then force sold onto the open market (see a).

These problems mean that, as it stands, the Bill could fatally undermine the government’s plan to regenerate council estates. To avoid these unintended consequences there will need to be strong, specific exemptions for council estate regeneration schemes from these aspects of the Housing Bill.

Third, the only funding so far announced is £140m. Across 100 estates that’s a tiny amount and is unlikely to be sufficient to deliver the quality of regeneration that’s being talked about. We should be aiming to replicate the best quality estate regenerations, such as the Packington Estate in Islington which was used extensively as a case study in the government’s media yesterday. This project alone took at least £33m of government subsidy – and that was in a very high value area where lots of cross-subsidy from sales was available. Private finance can support regeneration, but it’s not a form of subsidy and so can’t provide genuinely affordable housing on its own.

All these challenges could be overcome if the government is willing to put in extra investment and to make exemptions from the Housing Bill.

But there’s a further challenge.

Many people, including many residents of council estates, will be very suspicious of the government’s motives. People will be worried that the programme is just an excuse to get rid of affordable, secure homes and replace them with homes to buy that are unaffordable to existing residents. These worries are entirely understandable when the recent track record of estate regeneration is far from stellar.

So to address these concerns, the government must be crystal clear that:

  • All existing social tenants will have a better home, at the same rent level and with the same or better security.
  • The extra homes built will be affordable for a range of Londoners, not just high earners.
  • There will be high quality, local housing for all those who have to move temporarily while regeneration goes ahead.

With these guarantees it may just be possible to get a sceptical public (and more importantly tenants) on board. Without it, this programme could join the long list of estate regeneration plans that have ended up bogged down in decades of confrontation, and failing to build the new affordable homes we need.